In this issue …
- House Taxation likely to begin working tax bills next week
- Suddenly, Senate has an income tax bill
- What about transportation?
- Senate leaning toward budget cuts?
- Problems with sales tax outlined
- Medicaid expansion hearing is next week
- New Economic Lifelines leadership announced
- Immigration issue returns
- Live streaming: how to watch committees online
House Taxation likely to begin working tax bills next week
The House Taxation Committee has held hours of hearings on tax issues during the first four weeks of the 2017 legislative session, exploring potential solutions to the state’s approximately $1.1 billion budget hole over the next two and a half years.
Chairman Steven Johnson (R-Assaria) said this week he hopes to begin working on tax legislation next week. That would come sometime after Tuesday’s Rise Up Kansas bill has a hearing.
HB 2237 is the comprehensive plan developed by the coalition of organizations that make up Rise Up Kansas. Here’s a link to the coalition’s web site that describes the legislation.
It includes taxing business pass through income; adjusting income tax rates; increasing motor vehicle fuels tax to replace transportation sales tax that would go to the general fund; stopping the “March to Zero” trigger mechanism that further reduces income tax rates; and reducing the food sales tax.
The committee spent much of this week reviewing sales tax exemptions with an eye toward removing some. It also took testimony on liquor and tobacco tax increases proposed by Governor Brownback and motor vehicle fuel tax increases.
Suddenly, Senate has an income tax bill
SB 147, an income tax bill, was introduced Thursday afternoon in the Kansas Senate with little information available on it until Thursday evening.
On Thursday afternoon, Senate Assessment and Taxation Committee Chair Caryn Tyson (R-Parker) announced a hearing on the bill for one p.m. Monday as lobbyists struggled to understand it to see if they wanted to testify.
Our first reading of the bill indicates it increases some of the existing individual income tax rates this year and eliminates the business income tax exemption passed in 2012. Penalties for certain underpayments are forgiven for much of this year since, if passed, many will not have had enough withholding or estimated tax paid.
What about transportation?
With all the focus on income taxes, the House Taxation Committee heard warnings from contractors and others that the state’s transportation program is on life support and needs attention. The comments came as the committee discussed motor fuels tax increases on Wednesday.
Bob Totten, Executive Vice President of the Kansas Contractors Association, told committee members $3.4 billion has been taken from the T-WORKS program. His association believes an eleven cent a gallon gas tax would raise $197 million, which would allow Kansas to have a safe and reliable highway system. Totten said the KCA likes the fuel tax because it can’t be taken for other purposes. The KCA is part of the Rise Up Kansas coalition (see story above) that also supports the increase.
Kansas Contractors Association President Kelly Briggs of Manhattan said the KCA wants to get Kansas back to normal regarding highways. “This was an experiment that did not work and we need to stop raiding the Bank of KDOT.”
Mike Shilling of Shilling Construction in Manhattan said, “When we have work, we employ 145 people. Right now, there is little or no work available due to the loss of funding.” Shilling blamed the situation o the 2012 income tax cuts and said the raiding of KDOT has to stop.
In my testimony on behalf of KEPC, I said, “As an organization, we do not yet have a position on what revenue source you should use to shore up the T-WORKS program, but it does need attention. We understand the overwhelming nature of the state’s current fiscal crisis demands your attention, but we urge you not to forget the importance of transportation and the danger of not paying attention to it.”
Senate leaning toward budget cuts?
Even though the Senate will have a hearing on an income tax bill Monday, Senators seem to be moving more slowly than the House on the issue.
A host of possible cuts were outlined at a closed caucus of Republican Senators held away from the Statehouse.
One conservative senator talked with me earlier about how cuts might affect K-12 education. In his scenario, school districts would be forced to use their reserves for the budget. He said it was estimated that at a 5 percent cut, 24 school districts would not have enough in reserves to finish out their budgets. At about an 8.5 percent cut, about 64 school districts would lack the reserves.
A solution would be to set aside a pool of funds to distribute to school districts without enough reserves to finish the year.
Problems with sales tax outlined
A leading researcher for the Kansas Legislature ran through problems with the state sales tax for the Senate Commerce Committee Thursday.
Chris Courtwright, Principal Economist with the Kansas Legislative Research Department, said Internet sales are a “huge and growing problem” for the state. “Hundreds of millions of dollars” are lost for state and local governments because of an inability to collect sales taxes on most online purchases. He said sales taxes lost to the internet are growing faster than expected.
Courtwright expressed two other opinions about what may be affecting poor collections. The recovery from the recession was not robust for low and moderate income Kansans. They don’t have the buying power they once possessed. He added that the high combined sales tax (state and local) in Kansas may be influencing consumer behavior. They might not spend as much or they might cross state lines for some purchases.
We at the Kansas Economic Progress Council have been arguing in testimony and public presentations that the shift from income to sales tax to fund state government is unwise because of just such weaknesses
A 1995 study by the Governor’s Tax Equity Task Force concluded: “Because all revenue sources have their weaknesses, a balanced tax system will reduce the magnitude of problems caused by over reliance on a single tax source.”
Medicaid expansion hearing is next week
The House Health and Human Services Committee will hold hearings on a Medicaid expansion bill on Monday, Wednesday, and Thursday of next week. Supporters will be heard February 8 (Wednesday).
If you would like to submit written testimony in support of expansion, you can e-mail it to testimony@expandKanCare.com. It will be included in materials presented to the committee.
Testimony should be addressed to Chairman Dan Hawkins and the House Health and Human Services Committee. Organizers suggest a people story would be powerful. Information to help on testimony can be found on the Alliance for a Health Kansas website.
New Economic Lifelines leadership announced
The co-chairs of the transportation coalition Economic Lifelines, Dan Watkins and John Koger, have announced a new Executive Director of the organization. She is Tara Mays. She is part of the Mays Group headed by former Speaker of the House Doug Mays.
The announcement of her appointment said, “She has broad knowledge of policy development with both the Kansas Department of Transportation and the Kansas Turnpike Authority. Tara’s work in Kansas government spans more than a decade centered around the development and implementation of the T-WORKS program and the advancement of transportation partnerships.”
Immigration issue returns
A business immigration coalition that seems to have been dormant for a few years is getting back together to react to new immigration-related legislation that has been introduced or is expected to be introduced.
The coalition of business and agriculture organizations was very active about five years ago. The election of President Trump and his proposals to restrict immigration may have encouraged the issue to re-emerge at the state level.
SB 133, introduced Thursday, is one such measure. The title of the bill is the Kansas employer e-verify accountability act. E-verify is an Internet-based system that allows businesses to determine the eligibility of their employees to work in the United States. It is a free service of U.S. Citizenship and Immigration Services.
Under the bill, all state and local government agencies must actively participate in the federal e-verify program to verify the legal status of all new employees. That would begin in 2018. No contracts for goods or services having a value of over $50,000 can be awarded to anyone who does not verify employees through e-verify.
The program is controversial because legal workers must prove they are eligible. If not approved, they have to spend their own time and effort to fix any errors in the system in order to be hired. One audit estimated that about one percent of e-verify subjects have initially been deemed ineligible when they were actually legal.
Live streaming: how to watch committees online
You can now watch many legislative committees online as they meet. Last year’s legislature authorized expansion of live streaming. Most committees have video as well as audio, but not all.
To listen live, go to the Kansas Legislature’s website committee tab and click on the committee you would like to follow.
Here are the committees you can listen to live:
112-N: House Appropriations (9a); House Commerce, Labor, and Economic Development (1:30p); and House Judiciary (3:30p)
346-S: House Federal and State Affairs (9a); Senate Judiciary (10:30a); K-12 Education Budget Committee (1:30p); and House Taxation (3:30p). 346-S streams both audio and video feed.
548-S: Senate Commerce (8:30a); Senate Assessment and Taxation (9:30a); Senate Ways and Means Committee (10:30a); and Senate Utilities (1:30p)
582-N: House Energy, Utilities, and Telecommunications (9a M/W); House Water and Environment (9a T/TH); House Transportation (1:30p); and House Agriculture (3:30p)
Other rooms are expected to be added later this month or next.
You should be able to click on the bill number and be taken to the Kansas Legislature’s web site page for that particular bill. You will be able to see all actions taken, read the bill, and read any supplemental notes (layman’s descriptions) and fiscal notes (how much does the bill cost the state) that have been prepared.